The Ukraine Topic as Key to European Energy Security

September 21, 2015

For the 9th year in a row, Platts, a leading global provider of energy, petrochemicals and metals information brought together European and global gas industry leaders, as well as representatives of government agencies and financial institutions for the Annual European Gas summit.

As the largest independent private oil & gas producer, Burisma Holdings joined discussions on the most acute energy issues, including gas demand scenarios, long-term contracts, gas/oil pricing dependency solutions, the role of liquid gas in securing energy supplies in Europe in the absence of an integrated gas market.

With the security of European natural gas supplies high on the agenda, many a time the focus was on geopolitical issues, and thus, on Ukraine. In this regard, this year’s attendees broadly covered European Commission’s legislative initiatives and the Third Energy Package issues.

“Today, European energy security is unimaginable without addressing the “Ukraine topic”. The Ukrainian gas market is a missing piece of the European puzzle, which leads to the risk of instability of energy supplies for both Ukrainian and European consumers, and thus, it becomes a security issue for the whole European continent”, said the Chairman of the Board of Directors at Burisma Holdings Alan Apter.

He also noted full support of Burisma Holdings for the initiatives to bring the Ukrainian regulatory framework in line with European energy standards. Ukraine accepted obligations under the Third Energy Package which pave the way for market liberalization and the removal of any unnecessary political mechanisms. Private producers and natural gas suppliers should have free undisturbed access to resources without restrictions.

Apart from that, Burisma Holdings CFO Alexander Gorbunenko noted Ukraine’s extremely slow progress in reforming the national tax system, especially when it comes to gas industry, making the country less competitive and unattractive to investors.

“It is very disconcerting to us that the government is hardly moving forward with its promises made in July at the conference in Washington to lower rental rates and reduce fiscal and regulatory burden on the entire industry. The specifically designated Committee of the Verkhovna Rada of Ukraine once again shunned all responsibility for promoting the very much-expected bill 2352a. By the look of it, reduction of rental rates would be suspended again, and fiscal pressure on private producers will increase forcing them to give up whatever financial resources they have got left by the end of this year or by the end of 2015-2016 heating season. Today, however, private companies do not forecast climate and mood deterioration in the industry. Sadly, they have to acknowledge a sharp industry slump and almost zero chances of keeping former productions levels intact”, said Alexander Gorbunenko.

The current situation regarding the entry into force of the new law on the natural gas market on October 1, 2015 is keeping the market players up at night. The legal framework for technical implementation of the norms of this law has not been finalized. Should there be a last minute decision on suspending the entry into force of certain legal acts, domestic energy market would have major repercussions to deal with.

“We put this matter on the table on numerous occasions. Also, as Europe’s energy security depends on the liberalization of Ukrainian gas market in Ukraine, we appealed to European market leaders, as well as representatives of the European Commission and the EU for their assistance in implementing the law on the Ukrainian natural gas market”, said Burisma Holdings CFO.

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